Committee reviews amendment to move public-sector risk pools to insurance oversight, add solvency tools

The Commerce and Consumer Affairs subcommittee on Thursday reviewed a proposed amendment to Senate Bill 297 that would transfer regulatory authority for pooled risk management programs from the Office of the Secretary of State to the New Hampshire Insurance Department and apply insurance solvency tools to those pools.

The amendment would add a licensure requirement for pooled risk management programs, require periodic financial reporting and risk-based capital (RBC) calculations, give the insurance commissioner authority to approve rates and examinations, and authorize the commissioner to require a guarantee fund or other backstops. It would also exempt licensed pooled risk management programs from being treated as third-party administrators under the state’s TPA definition.

Supporters said the change is intended to reduce the chance of insolvency by giving regulators the tools they use for insurers. Opponents, and some pool representatives, warned the move could reduce local control, add administrative cost and risk affecting tax-exempt status for public-sector pools.

"We did note that when the proposal went to OLS, they added section 1, and we don't like that section 1, so we have an alternative," said Michelle Hee, director of life and health at the New Hampshire Insurance Department, describing technical edits the department prefers to the language that appeared after the bill went to legislative services. She said the department proposes to add a definition that would exempt a pooled risk management program license under the new chapter from being considered a TPA so the pools would not need multiple licenses.

Insurance department staff, represented in the hearing by a presenter identified as Alex, summarized the amendment as preserving the purpose and permissible coverages from the existing RSA 5‑B statute while adding a formal licensure and solvency regime. Key provisions described include prior approval of rates, annual reporting of RBC, minimum capitalization tied to NAIC RBC formulas, examination authority, investment limitations consistent with Title 37 (the state insurance code), inter‑affiliate transaction review, and a severability clause.

"The license is the key. Is the process," the presenter said when explaining why licensure is required to bring solvency tools to these entities.

The amendment would allow pooled programs to establish an internal guarantee fund and would require programs to "seek to maintain" at least $5 million in excess or stop‑loss coverage unless the commissioner determines a lower amount is appropriate. The amendment would also preserve a prohibition on labeling pooled risk management programs as insurers while making many Title 37 solvency provisions applicable.

Representatives pressed officials on implications for members of the pools. Representative Prasad asked whether licensure would subject pools to new assessments; Alex said pooled risk programs would pay a one‑time or modest renewal fee (the draft referenced an initial filing fee of $150 and a renewal fee), but would not be subject to premium taxes or the insurance department's administrative assessment because pools, as drafted, remain distinct from insurers for taxation.

Representatives and witnesses discussed the practical difference between assessable and non‑assessable policies. "Pooled risk management programs are allowed to issue assessable policies," the presenter said, explaining an assessable policy permits a post‑year assessment if claims exceed collected premium. Several witnesses emphasized many public pools operate on non‑assessable, fixed‑premium models important to municipal budgeting.

Lisa Duquette, executive director of SchoolCare, said she had just received the amendment earlier that morning and raised objections. SchoolCare serves about 25,000 covered lives and administers roughly $250 million of coverage, she said. Duquette warned the department's insurance language and RBC focus could undermine local governance and might put tax‑exempt status at risk. "This amendment as proposed is something I just saw this morning. ... There are additional administrative costs, and those costs are gonna be passed directly down to the taxpayers," she said.

Scott Daroch, executive director of HealthTrust, and Gene Herrick, HealthTrust general counsel, testified in favor of the amendment as drafted for the insurance department, arguing the RBC approach is actuarially sound and that the amendment provides a clearer, more durable set of solvency tools than the original bill. HealthTrust told the committee it covers roughly 72,000 lives and handles about $500 million in annual contributions and that it could not continue to offer non‑assessable policies under the lower reserve levels in the original Senate bill.

Lawmakers asked whether the department had requested the oversight. Michelle Hee and other witnesses clarified that the department did not formally request transfer of oversight; the draft language was prepared at the committee's request to show how the insurance department would administer regulation if the legislature chose to transfer authority.

Several committee members raised process and impact questions: whether rate approvals would remove local member input, how RBC formulas translate to target reserve levels, whether the new reporting and actuarial requirements would impose onerous administrative costs on pools, and how assessments or premium increases might affect municipal budgets. Insurance staff said rulemaking and a transition period could address timing and reporting format issues for pools on fiscal rather than calendar years.

No final committee vote was taken on Senate Bill 297; the committee scheduled additional subcommittee time and public comment to continue consideration.

The subcommittee's discussion captured a split among public‑sector pool leaders about the best path to solvency and transparency. HealthTrust endorsed the insurance department approach as enabling both assessable and non‑assessable models to continue, while SchoolCare urged adoption of Senator Carson's amendment to S.B. 297 (discussed in committee) and further work on protecting local governance and tax status.

The committee left open next steps, including additional rules drafting and a possible option—mentioned by a committee member—to allow pools to choose whether to remain under RSA 5‑B or opt into a new insurance‑style chapter if lawmakers wanted to offer a market choice rather than a mandatory transfer.

Context: the proposal responds to recent insolvency events among pooled risk programs in the state and aims to apply long‑used insurance solvency tools — rate approval, RBC, examinations and receivership authority — to reduce future insolvency risk.

A second subcommittee meeting and additional opportunities for public comment were scheduled before a final committee vote would be expected.